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Consolidated Data Terminals v. Applied Digital Data Systems, Inc.

708 F.2d 385 (1983)

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Consolidated Data Terminals v. Applied Digital Data Systems, Inc.

United States Court of Appeals for the Ninth Circuit

708 F.2d 385 (1983)

Facts

Applied Digital Data Systems, Inc. (ADDS) (defendant) manufactured computer equipment, including cathode-ray computer terminals. In 1976, ADDS entered into an agreement with Consolidated Data Terminals (CDT) (plaintiff), which distributed such computer terminals. Under the agreement, CDT acted as a distributor of ADDS’s computer terminals. In late 1977, CDT began ordering the latest version of the computer terminals, the Regent 100, which was supposedly the most advanced version. ADDS provided documentation that the Regent 100s would operate at a relatively high speed of 19,200 baud and claimed that they were inherently reliable. However, the Regent 100s had many problems and significantly underperformed in speed. Eventually, ADDS changed the specifications down to 1,900 baud. CDT sued ADDS, alleging a breach of warranty. ADDS asserted that its contract disclaimed all warranties except for a 90-day guarantee covering materials and workmanship. After a trial, the district court ruled for CDT, and ADDS appealed.

Rule of Law

Issue

Holding and Reasoning (Fletcher, J.)

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